When a Company Decides to Insure Its Buildings and Equipment

question 168

True/False

When a company decides to insure its buildings and equipment against loss by fire, it is practising risk transfer.

---

Definitions:

Payee

The party in a financial transaction who receives payment.

Note Receivable

A written promise that entitles the holder to receive a specified amount of money from another party at a future date.

Interest

A charge for borrowed money, generally a percentage of the amount borrowed.

Maturity Value

The total amount payable to an investor at the end of a fixed-income security's life, including both the principal and interest.